3 Key Investing Lessons Learned from the 2021 Stock Market

NYSE: SPY | SPDR S&P 500 ETF Trust News, Ratings, and Charts

SPY – Investors who do not properly face the problems of the past are doomed to repeat those same mistakes. That is why I so strongly believe in doing this annual “Lessons Learned” commentary to discover strategies that will allow us to beat the stock market (SPY) in the years ahead. Enjoy!.

(Please enjoy this updated version of my weekly commentary from the Reitmeister Total Return newsletter).

As I look back over the past year, I see 3 key lessons worth sharing at this time. Fully understanding each should benefit our investing strategies down the road.

Lesson 1: Don’t Believe the Hype

Fear sells.

That is the mantra of all news outlets and for good reason. The more they can scare you, the more you will pay attention, the more money they can get in advertising dollars. This formula is the same in all media: print, radio, online and TV.

And yes, it is just as true in the investment news media which is why we so often see scary headlines that make us question the future health of the market. However, with my Economics degree to go hand in hand with over 40 years of investing experience, I can tell you that it actually is VERY HARD to create a bear market.

Think of it like a court case where you need the preponderance of the evidence to lead to a bearish verdict. So just 1 or 2 random facts that may produce a scintillating article, actually does not sway the investment jury to start selling stocks in earnest.

No, I am not saying to cast a blind eye to these things either. Instead it is to weigh the full body of evidence on the economy to appreciate if a recession is coming that would produce bearish results.

I hope you agree that has always been my Modus Operandi which has helped us patiently wait through countless shallow and short lived pullbacks in 2021 for the bull to sprint higher once again.

Lesson 2: Price Action is NOT Truth

My investing roots are firmly grounded in the value camp. That’s because my father, a veteran Certified Financial Planner, was my original teacher…and he firmly believed in value principles (some might simply call him “downright cheap” 😉

This contrarian point of view always had me believing that other investors could be wrong and that companies are OFTEN mispriced. So if I just worked hard enough I could unearth truly great stocks trading at discounted prices. This is another way of saying that the classic technical analysis view that “price action is truth” is often an out and out lie.

I felt that way decades ago. But even more so now with the rise of computer based trading. These algos and HFTs have deep pockets to push around any stock at any time to the force of their will. Often shorting a stock to pound it into submission only to get it down to an attractive price where they become buyers. Yes, a round trip ticket to profit town.

The point is that computer based trading makes a mockery of price action. And what happens today, or the past week, has absolutely nothing to do with what lies ahead.

Instead I find fundamentals to be a much more accurate guide to the future potential of a stock. Even better, relying upon the 118 factor deep dive analysis afforded by our proprietary POWR Ratings system.

To my knowledge it is the most complete review of a stock available to individual investors. The merits of which are fully on display with the average annual return of +30.72% for the A rated stocks.

With the help of the POWR Ratings we can more confidently assess the future potential of a stock than looking at the swirling winds of price action.

Lesson 3: Low Rates is Still the #1 Reason for Bull Market

In my 2020 Lessons Learned commentary, I decided it only made sense to focus on 1 lesson. And that was to form a long lasting understanding that low rates is the #1 elixir for a bullish market environment. Even more so than GDP, earnings, or employment metrics.

The OVERWHELMING proof of this was on full display in late March of 2020 when we were in the firm grips of the Covid Crisis and yet a new bull market emerged to EVERYONE’S surprise.

Not because we knew the economy would soon improve…as it most certainly did not quickly recover.

It was ONLY because that interest rates dropped to a new historic low of 0.5% for the 10 year Treasury that resulted in stocks being the much better investment. Heck, even the dividend yield on the stock market was higher than the rate of return on bonds.

This had money flooding back to stocks to patiently wait for whenever the economy would rebound creating a more natural reason to rebound.

It was the firm knowledge of this past lesson learned that allowed me to be so patient during every pullback and correction in 2021. That’s because the bullish math of stocks earnings yield versus bonds yield will make all pullbacks shallow and short lived.

Part 2 of this final lesson is to emphasize the importance of this annual exercise. Often we don’t want to go through the process because it would include facing up to mistakes we made in the past. However, we cannot let ego rule the day.

Instead we need to approach this process honestly and openly. That is the only way to expose potential flaws in our approach that can be eradicated to our financial benefit in the future.

Case in point is that in 2020 I did not appreciate the importance of low rates until the market had already bounced 15-20% from bottom.

Now after facing that past mistake it helped me stay firmly long the market during periods of severe volatility when many other investors lost their grip on the bull. It is for that reason and more that we need to go through this annual analysis process to help pave the way to better returns in the future.

What To Do Next?

Discover my top picks for the year ahead.

I am referring to the 12 stocks and 2 ETFs in my Reitmeister Total Return portfolio.

These selections are based upon my 40 years of investing experience. Plus we rely heavily on the benefits of the POWR Ratings model with it’s impressive +30.72% annual returns since 1999.

All you have to do to see my current recommendations is to…

Click Here to Learn More >

Wishing you a world of investment success!


Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, Stock News Network and Editor, Reitmeister Total Return


SPY shares were trading at $477.54 per share on Thursday afternoon, up $0.06 (+0.01%). Year-to-date, SPY has gained 29.43%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Reitmeister


Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...


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